1. Denial of a motion to set aside default judgment is subject to review under a standard of
abuse of discretion. A district court decision that denies a motion to join a party as a
necessary party under K.S.A. 60-219(a) is also subject to an abuse of discretion standard
of review.

2. Whether the evidence demonstrates that the statutory requirements for joinder have been
met is a mixed question of fact and law. When reviewing a mixed question of fact and law,
an appellate court reviews the district court's factual findings for substantial competent
evidence and reviews de novo the district court's legal conclusions.

3. Intervention as a matter of right is subject to the same mixed determination of law and fact
as is joinder. Permissive intervention lies within the discretion of the district court.

4. Judicial discretion is abused when no reasonable person would take the view adopted by
the trial court. Review for abuse of discretion includes review to determine whether
erroneous legal conclusions guided the exercise of discretion.

5. K.S.A. 60-255(b) does not require that the party moving for relief from default judgment
be a party to the action.

6. It is appropriate for a trial court to consider evidence beyond the bare pleadings to
determine whether it should set aside a default judgment. In a motion to set aside default,
a trial court should consider a variety of factors to determine whether the defendant or
would-be defendant had a meritorious defense, and the burden of establishing a
meritorious defense rests with the moving party.

7. Relief under K.S.A. 60-255(b) is appropriate only upon a showing that if relief is granted
the outcome of the suit may be different than if the entry of default or the default judgment
is allowed to stand; the showing should underscore the potential injustice of allowing the
case to be disposed of by default. In most cases the court will require the party in default
to demonstrate a meritorious defense to the action as a prerequisite to vacating the default
entry or judgment. The nature and extent of the showing that will be necessary lie within
the trial court's discretion.

8. The law relating to a contingently necessary party closely resembles the law relating to
vacating default judgment, in that both require the party asserting the interest to
demonstrate a meritorious defense or an interest that may be impaired.

9. The word "nominee" is subject to more than one interpretation. The legal significance of
the word depends on the context in which it is used. The word encompasses a range of
meanings from a straw man or limited agent to a representative enjoying the same legal
rights as the party that acts as the nominator.

10. The law generally understands that a mortgagee is not distinct from a lender: a
mortgagee
is a party to whom property is mortgaged, which is to say, a mortgage creditor or lender.
A mortgagee and a lender have intertwined rights that defy a clear separation of interests.

11. Parties are bound by the formal admissions of their counsel in an action.

12. The Due Process Clause does not protect entitlements where the identity of the
alleged
entitlement is vague. A protected property right must have some ascertainable monetary
value. An entitlement to a procedure does not constitute a protected property interest.

Review of the judgment of the Court of Appeals in 40 Kan. App. 2d 325, 192 P.3d 177 (2008). Appeal from Ford District Court; E. LEIGH HOOD, judge. Judgment of the Court of Appeals affirming the district court is affirmed. Judgment of the district court is affirmed. Opinion filed August 28, 2009.

David A. Schatz, of Husch Blackwell Sanders L.L.P., of Kansas City,
Missouri, for amicus curiae
American Land Title Association.

The opinion of the court was delivered by

ROSEN, J.: Mortgage Electronic Registration Systems, Inc. (MERS) and Sovereign Bank
seek review of an opinion by our Court of Appeals holding that a nonlender is not a contingently
necessary party in a mortgage foreclosure action and that due process does not require that a
nonlender be allowed to intervene in a mortgage foreclosure action.

The facts underlying this appeal are not in dispute. On March 19, 2004, Boyd Kesler
secured a loan of $50,000 from Landmark National Bank (Landmark) with a mortgage registered
in Ford County, Kansas. On March 15, 2005, he secured an additional loan of $93,100 from
Millennia Mortgage Corp. (Millennia) through a second mortgage registered in Ford County.
Both mortgages were secured by the same real property located in Ford County.

The second mortgage lies at the core of this appeal. That mortgage document stated that
the mortgage was made between Kesler--the "Mortgagor" and "Borrower"--and MERS, which
was acting "solely as nominee for Lender, as hereinafter defined, and Lender's successors and
assigns." The document then identified Millennia as the "Lender." At some subsequent time, the
mortgage may have been assigned to Sovereign and Sovereign may have taken physical
possession of the note, but that assignment was not registered in Ford County.

On April 13, 2006, Kesler filed for bankruptcy in the United States Bankruptcy Court for
the District of Kansas, Wichita Division. He named Sovereign as a creditor; although he claimed
the secured property as exempt, he filed an intention to surrender the property. The bankruptcy
court discharged his personal liability on November 16, 2006. The record contains little
documentation or evidence explaining the interplay of the bankruptcy and the foreclosure action,
except to suggest that the bankruptcy action may have given Sovereign constructive notice of a
possible default on payments.

On July 27, 2006, Landmark filed a petition to foreclose on its mortgage, serving and
naming as defendants Kesler and Millennia. It did not serve notice of the litigation on MERS or
Sovereign. In the absence of answers from either defendant, the trial court entered default
judgment against Kesler and Millennia on September 6, 2006. The trial court then filed an order
of sale on September 29, 2006. Notice of the sale was initially published in the Dodge City Daily
Globe on October 4, 2006. On October 26, 2006, Dennis Bristow and Tony Woydziak purchased
the secured property at a sheriff's sale for $87,000, and on November 14, 2006, Landmark filed a
motion to confirm sale of the secured property.

Also on November 14, 2006, Sovereign filed an answer to the foreclosure petition,
asserting an interest in the real property as the successor in interest to Millennia's second
mortgage. A week later, on November 21, 2006, Sovereign filed a motion to set aside or vacate
the default judgment and an objection to confirmation of sale. The motion asserted that MERS
was a K.S.A. 60-219(a) contingently necessary party and, because Landmark failed to name
MERS as a defendant, Sovereign did not receive notice of the proceedings. The motion asked the
court to vacate the default judgment under K.S.A. 60-260(b). The motion further asked the court
to set aside the surplus from the sale, holding it to later to be paid to Sovereign if the court
elected not to grant the motion to vacate.

On November 27, 2006, Kesler filed a motion seeking distribution of surplus funds from
the sheriff's sale, and on January 3, 2007, Kesler filed a motion joining Landmark's earlier motion
to confirm the sheriff's sale. The trial court conducted a hearing on the various motions on
January 8, 2007, at which counsel for Landmark, Kesler, Sovereign, and Bristow appeared and
presented their cases. The trial court deferred judgment pending review of the pleadings.

On January 16, 2007, MERS filed a motion joining Sovereign's motion to vacate the
journal entry of default judgment and objecting to confirmation of the sheriff's sale, followed on
January 18, 2007, by a motion to intervene under K.S.A. 60-224. MERS proffered an answer and
a cross-claim to the original foreclosure petition.

On that same date, the trial court filed an order finding that MERS was not a real party in
interest and Landmark was not required to name it as a party to the foreclosure action. The court
found that MERS served only as an agent or representative for Millennia. The court also found
that Sovereign's failure to register its interest with the Ford County Register of Deeds precluded it
from asserting rights to the mortgage after judgment had been entered. The court denied the
motions to set aside judgment and to intervene and granted the motions to confirm the sale and to
distribute the surplus.

On February 1, 2007, MERS and Sovereign filed motions to reconsider. The trial court
conducted a hearing on those motions, at which counsel for Kesler, Sovereign, and
MERS
appeared and argued. The trial court subsequently entered an order denying the motions to
reconsider. MERS and Sovereign filed timely notices of appeal.

Prior to the appellants submitting their briefs, the purchasers Bristow and Woydziak filed a
motion with the Court of Appeals seeking leave to intervene in the appeal. The Court of Appeals
granted the motion. Bristow and Woydziak then filed a motion to compel the office of the Clerk
of the Appellate Courts to docket their cross-appeal, which the Court of Appeals denied. The
Court of Appeals affirmed the district court in Landmark National Bank v. Kesler, 40
Kan. App.
2d 325, 192 P.3d 177 (2008). This court granted the appellants' petition for review.

I. Did The District Court Abuse Its Discretion In Denying MERS's Motion To Set
Aside
Default Judgment And Motion To Intervene As A Contingently Necessary Party?

A. Standard of Review

Denial of a motion to set aside a default judgment is subject to review under a standard of
abuse of discretion. See Canaan v. Bartee, 272 Kan. 720, Syl. ¶ 9, 35 P.3d 841
(2001). A district
court decision that denies a motion to join a party as a necessary party under K.S.A. 60-219(a) is
also subject to an abuse of discretion standard of review. State ex rel. Graeber v. Marion
County
Landfill, Inc., 276 Kan. 328, 352, 76 P.3d 1000 (2003). Whether the evidence
demonstrates that
the statutory requirements for joinder have been met is a mixed question of fact and law. When
reviewing a mixed question of fact and law, an appellate court reviews the district court's factual
findings for substantial competent evidence and reviews de novo the district court's legal
conclusions. State v. Fisher, 283 Kan. 272, 286, 154 P.3d 455 (2007).

Intervention as a matter of right is subject to the same mixed determination of law and fact
as is joinder. K.S.A. 60-224(a). Permissive intervention lies within the discretion of the district
court. K.S.A. 60-224(b); see Stringfellow v. Concerned Neighbors in Action, 480
U.S. 370, 382
n.1, 94 L. Ed. 2d 389, 107 S. Ct. 1177 (1987) (Brennan, J., concurring) (discussing the different
standards applied to Federal Rule of Civil Procedure 24[a] and [b]).

While this is a matter of first impression in Kansas, other jurisdictions have issued opinions
on similar and related issues, and, while we do not consider those opinions binding in the current
litigation, we find them to be useful guideposts in our analysis of the issues before us.

At the heart of this issue is whether the district court abused its discretion in refusing to
set aside the default judgment and in refusing to join MERS as a contingently necessary party.

The statutory provision for setting aside a default judgment is K.S.A. 60-255(b), which
refers to K.S.A. 60-260(b), relating to relief from judgment, in a manner similar to the correlation
between the corresponding federal rules, Fed. R. Civ. Proc. 55(c) and 60(b). K.S.A. 60-260(b)
allows relief from a judgment based on mistake, inadvertence, surprise, or excusable neglect;
newly discovered evidence that could not have been timely discovered with due diligence; fraud
or misrepresentation; a void judgment; a judgment that has been satisfied, released, discharged, or
is no longer equitable; or any other reason justifying relief from the operation of the judgment.
K.S.A. 60-260(b) requires that the motion be made by a party or by a representative who is in
privity with a party, thus precluding a nonparty of standing to file such a motion. K.S.A.
60-255(b) does not, however, require that the movant be a party to the action. See 11 Wright,
Miller
& Kane, Federal Practice & Procedure: Civil 2d § 2865 (1995).

It is appropriate--and probably necessary--for a trial court to consider evidence beyond
the bare pleadings to determine whether it should set aside a default judgment. In a motion to set
aside default, a trial court should consider a variety of factors to determine whether the defendant
(or would-be defendant) had a meritorious defense, and the burden of establishing a meritorious
defense rests with the moving party. See Canaan v. Bartee, 272 Kan. 720, 731, 35
P.3d 841
(2001).

This conclusion is consistent with the construction of the parallel federal rules:

"Generally, a federal court will grant a motion under Rule 55(c) only after some
showing is made that if relief is granted the outcome of the suit may be different than if the entry
of default or the default judgment is allowed to stand; the showing should underscore the
potential injustice of allowing the case to be disposed of by default. In most cases, therefore,
the
court will require the party in default to demonstrate a meritorious defense to the action as a
prerequisite to vacating the default entry or judgment. . . .

"A majority of the courts . . . have insisted upon a presentation of some factual
basis for
the supposedly meritorious defense. . . .

"The demonstration of a meritorious defense is not expressly called for by the
federal
rules and, therefore, the nature and extent of the showing that will be necessary is a matter
that
lies within the court's discretion. . . . The underlying concern isto
determine whether there is
some possibility that the outcome of the suit after a full trial will be contrary to the result
achieved by the default." (Emphasis added.) 10A Wright, Miller & Kane, Federal
Practice &
Procedure: Civil 3d § 2697 (1998).

We accordingly find that it was incumbent on the trial court, when ruling on the motion to
set aside default judgment, to consider whether MERS would have had a meritorious defense if it
had been named as a defendant and whether there was some reasonable possibility MERS would
have enjoyed a different outcome from the trial if its participation had precluded default judgment.

In determining whether MERS was a contingently necessary party that was entitled to
relief from judgment, the trial court was required to consider the factors of K.S.A. 60-219(a) in
addition to those of K.S.A. 60-260(b).

K.S.A. 60-219(a) defines which parties are to be joined in an action as necessary for just
adjudication:

"A person is contingently necessary if (1) complete relief cannot be accorded in his
absence among those already parties, or (2) he claims an interest relating to the property or
transaction which is the subject of the action and he is so situated that the disposition of the
action in his absence may (i) as a practical matter substantially impair or impede his ability to
protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed
interest."

The law relating to a contingently necessary party closely resembles the law relating to
vacating a default judgment, in that both require the party asserting the interest to demonstrate a
meritorious defense or an interest that may be impaired. In order to prevail on appeal, MERS
must demonstrate that the trial court abused its discretion when it found, based on the testimony,
evidence, and pleadings before the court at the time when it considered the motion to set aside
default judgment, that MERS lacked a meritorious defense to the foreclosure proceeding or had
an interest that could be impaired. We will accordingly examine the nature of the interest in the
mortgage that MERS has demonstrated.

Sovereign is a financial institution that putatively purchased the Kesler mortgage from
Millennia but did not register the transaction in Ford County. The relationship of MERS to the
transaction is not subject to an easy description. One court has described MERS as follows:

"MERS is a private corporation that administers the MERS System, a national
electronic
registry that tracks the transfer of ownership interests and servicing rights in mortgage loans.
Through the MERS System, MERS becomes the mortgagee of record for participating members
through assignment of the members' interests to MERS. MERS is listed as the grantee in the
official records maintained at county register of deeds offices. The lenders retain the promissory
notes, as well as the servicing rights to the mortgages. The lenders can then sell these interests to
investors without having to record the transaction in the public record. MERS is compensated for
its services through fees charged to participating MERS members." Mortgage Elec. Reg.
Sys.,
Inc. v. Nebraska Depart. of Banking, 270 Neb. 529, 530, 704 N.W.2d 784 (2005).

The second mortgage designated the relationships of Kesler, MERS, and Millennia and
established payment and notice obligations. That document purported to define the role played by
MERS in the transaction and the contractual rights of the parties.

The document began by identifying the parties:

"THIS MORTGAGE is made this 15th day of March 2005, between the
Mortgagor,
BOYD A. KESLER, (herein 'Borrower'), and the Mortgagee, Mortgage Electronic Registration
Systems, Inc. ('MERS'), (solely as nominee for Lender, as hereinafter defined, and Lender's
successors and assigns). MERS is organized and existing under the laws of Delaware, and has an
address and telephone number of P.O. Box 2026, Flint, MI 48501-2026, tel. (888) 679-MERS.
MILLENNIA MORTGAGE CORP., A CALIFORNIA CORPORATION is organized and
existing under the laws of CALIFORNIA and has an address of 23046 AVENIDA DE LA
CARLOTA #100, LAGUNA HILLS, CALIFORNIA 92653 (herein 'Lender')."

The third paragraph of the first page of the mortgage document conveyed a security
interest in real estate:

"TO SECURE to Lender the repayment of the indebtedness evidenced by the
Note, with
interest thereon; the payment of all other sums, with interest thereon, advanced in accordance
herewith to protect the security of this Mortgage; and the performance of the covenants and
agreements of Borrower herein contained, Borrower does hereby mortgage, grant and convey to
MERS (solely as nominee for Lender and Lender's successors and assigns) and to the successors
and assigns of MERS the following described property located in the County of FORD, State of
Kansas."

The first paragraph of the second page of the mortgage document contains the following
language that apparently both limits and expands MERS's rights:

"Borrower understands and agrees that MERS holds only legal title to the interests
granted by
Borrower in this Mortgage; but, if necessary to comply with law or custom, MERS, (as nominee
for Lender and Lender's successors and assigns), has the right: to exercise any and all of those
interests, including, but not limited to, the right to foreclose and sell the Property; and to take any
action required of Lender including, but not limited to, releasing or cancelling this Mortgage."

Paragraph 7 of the mortgage document provides the lender with the right to protect the
security:

"If Borrower fails to perform the covenants and agreements contained in this
Mortgage,
or if any action or proceeding is commenced which materially affects Lender's interest in the
Property, then Lender, at Lender's option, upon notice to Borrower, may make such appearances,
disburse such sums, including reasonable attorneys' fees, and take such action as is necessary to
protect Lender's interest."

Paragraph 9 of the mortgage document provides the lender with rights in the event of a
condemnation:

"Condemnation. The proceeds of any award or claim for damages, direct or
consequential, in connection with any condemnation or other taking of the Property, or part
thereof, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to
Lender, subject to the terms of any mortgage, deed of trust or other security agreement with a lien
which has priority over this mortgage."

Paragraph 12 of the mortgage document addresses notice:

"Notice. Except for any notice required under applicable law to be given in another
manner, (a) any notice to Borrower provided for in this Mortgage shall be given by delivering it
or by mailing such notice by certified mail addressed to Borrower at the Property Address or at
such other address as Borrower may designate by notice to Lender as provided herein, and (b)
any notice to Lender shall be given by certified mail to Lender's address stated
herein or to such
other address as Lender may designate by notice to Borrower as provided herein. Any notice
provided for in this Mortgage shall be deemed to have been given to Borrower or Lender when
given in the manner designated herein." (Emphasis added.)

The signature page of the mortgage document contains language relating to notice in the
event of default:

"Borrower and Lender request the holder of any mortgage, deed of
trust or other
encumbrance with a lien which has priority over this Mortgage to give Notice to
Lender, at
Lender's address set forth on page one of this Mortgage, of any default under
the superior
encumbrance and of any sale or other foreclosure action." (Emphasis added.)

The mortgage instrument states that MERS functions "solely as nominee" for the lender
and lender's successors and assigns. The word "nominee" is defined nowhere in the mortgage
document, and the functional relationship between MERS and the lender is likewise not defined.
In the absence of a contractual definition, the parties leave the definition to judicial interpretation.

What meaning is this court to attach to MERS's designation as nominee for Millennia? The
parties appear to have defined the word in much the same way that the blind men of Indian legend
described an elephant--their description depended on which part they were touching at any given
time. Counsel for Sovereign stated to the trial court that MERS holds the mortgage "in street
name, if you will, and our client the bank and other banks transfer these mortgages and rely on
MERS to provide them with notice of foreclosures and what not." He later stated that the
nominee "is the mortgagee and is holding that mortgage for somebody else." At another time he
declared on the record that the nominee

"is more like a trustee or more like a corporation, a trustee that has multiple beneficiaries.
Now a
nominee's relationship is not a trust but if you have multiple beneficiaries you don't serve one of
the beneficiaries you serve the trustee of the trust. You serve the agent of the corporation."

Counsel for the auction property purchasers stated that a nominee is "one designated to act
for
another as his representative in a rather limited sense." He later deemed a nominee to be "like a
power of attorney."

Black's Law Dictionary defines a nominee as "[a] person designated to act in place of
another, usu. in a very limited way" and as "[a] party who holds bare legal title for the benefit of
others or who receives and distributes funds for the benefit of others." Black's Law Dictionary
1076 (8th ed. 2004). This definition suggests that a nominee possesses few or no legally
enforceable rights beyond those of a principal whom the nominee serves.

In its opinion below, the Court of Appeals cited Thompson v. Meyers, 211
Kan. 26, 30,
505 P.2d 680 (1973), which provides the only discussion in Kansas of the legal significance of a
nominee:

"In common parlance the word 'nominee' has more than one meaning. Much
depends on
the frame of reference in which it is used. In Webster's Third New International Dictionary,
unabridged, one of the definitions given is 'a person named as the recipient in an annuity or
grant.' We view a 'nominee', as the term was used by the parties here, not simply in the sense of a
straw man or limited agent. . . , but in the larger sense of a person designated by them to
purchase the real estate, who would possess all the rights given a buyer . . . ."

The legal status of a nominee, then, depends on the context of the relationship of the
nominee to its principal. Various courts have interpreted the relationship of MERS and the lender
as an agency relationship. See In re Sheridan, ___ B.R. ___, 2009 WL 631355, at *4
(Bankr. D.
Idaho March 12, 2009) (MERS "acts not on its own account. Its capacity is representative.");
Mortgage Elec. Registration System, Inc. v. Southwest, ___ Ark. ___, ___, ___
S.W.3d ___,
2009 WL 723182 (March 19, 2009) ("MERS, by the terms of the deed of trust, and its own
stated purposes, was the lender's agent"); LaSalle Bank Nat. Ass'n v. Lamy, 2006 WL
2251721,
at *2 (N.Y. Sup. 2006) (unpublished opinion) ("A nominee of the owner of a note and mortgage
may not effectively assign the note and mortgage to another for want of an ownership interest in
said note and mortgage by the nominee.")

The relationship that MERS has to Sovereign is more akin to that of a straw man than to a
party possessing all the rights given a buyer. A mortgagee and a lender have intertwined rights
that defy a clear separation of interests, especially when such a purported separation relies on
ambiguous contractual language. The law generally understands that a mortgagee is not distinct
from a lender: a mortgagee is "[o]ne to whom property is mortgaged: the mortgage creditor, or
lender." Black's Law Dictionary 1034 (8th ed. 2004). By statute, assignment of the mortgage
carries with it the assignment of the debt. K.S.A. 58-2323. Although MERS asserts that, under
some situations, the mortgage document purports to give it the same rights as the lender, the
document consistently refers only to rights of the lender, including rights to receive notice of
litigation, to collect payments, and to enforce the debt obligation. The document consistently
limits MERS to acting "solely" as the nominee of the lender.

Indeed, in the event that a mortgage loan somehow separates interests of the note and the
deed of trust, with the deed of trust lying with some independent entity, the mortgage may
become unenforceable.

"The practical effect of splitting the deed of trust from the promissory note is to make it
impossible for the holder of the note to foreclose, unless the holder of the deed of trust is the
agent of the holder of the note. [Citation omitted.] Without the agency relationship, the person
holding only the note lacks the power to foreclose in the event of default. The person holding
only the deed of trust will never experience default because only the holder of the note is entitled
to payment of the underlying obligation. [Citation omitted.] The mortgage loan becomes
ineffectual when the note holder did not also hold the deed of trust." Bellistri v. Ocwen
Loan
Servicing, LLC, 284 S.W.3d 619, 623 (Mo. App. 2009).

The Missouri court found that, because MERS was not the original holder of the
promissory note and because the record contained no evidence that the original holder of the note
authorized MERS to transfer the note, the language of the assignment purporting to transfer the
promissory note was ineffective. "MERS never held the promissory note, thus its assignment of
the deed of trust to Ocwen separate from the note had no force." 284 S.W.3d at 624; see also
In
re Wilhelm, 407 B.R. 392 (Bankr. D. Idaho 2009) (standard mortgage note language does
not
expressly or implicitly authorize MERS to transfer the note); In re Vargas, 396 B.R.
511, 517
(Bankr. C.D. Cal. 2008) ("[I]f FHM has transferred the note, MERS is no longer an authorized
agent of the holder unless it has a separate agency contract with the new undisclosed principal.
MERS presents no evidence as to who owns the note, or of any authorization to act on behalf of
the present owner."); Saxon Mortgage Services, Inc. v. Hillery, 2008 WL 5170180
(N.D. Cal.
2008) (unpublished opinion) ("[F]or there to be a valid assignment, there must be more than just
assignment of the deed alone; the note must also be assigned. . . . MERS purportedly assigned
both the deed of trust and the promissory note. . . . However, there is no evidence of record that
establishes that MERS either held the promissory note or was given the authority . . . to assign the
note.").

What stake in the outcome of an independent action for foreclosure could MERS have? It
did not lend the money to Kesler or to anyone else involved in this case. Neither Kesler nor
anyone else involved in the case was required by statute or contract to pay money to MERS on
the mortgage. See Sheridan, ___ B.R. at ___ ("MERS is not an economic
'beneficiary' under the
Deed of Trust. It is owed and will collect no money from Debtors under the Note, nor will it
realize the value of the Property through foreclosure of the Deed of Trust in the event the Note is
not paid."). If MERS is only the mortgagee, without ownership of the mortgage instrument, it
does not have an enforceable right. See Vargas, 396 B.R. 517 ("[w]hile the note is
'essential,' the
mortgage is only 'an incident' to the note" [quoting Carpenter v.Longan,
16 Wall. 271, 83 U.S.
271, 275, 21 L. Ed 313 (1872)]).

When it found that MERS did not have an interest in the property that was impaired by
the default judgment, the trial court properly considered four factors: (1) that the written
pleadings and oral arguments by MERS and Sovereign identified MERS as acting only as a digital
mortgage tracking service; (2) that counsel for MERS insisted that no evidence of a financial or
property interest was necessary and its argument rested solely on its identity as the mortgagee on
the mortgage document, when counsel was directly challenged to produce evidence of a financial
or property interest; (3) that evidence showed that Sovereign was on notice that Landmark had
leave of the bankruptcy court to proceed with foreclosure and that MERS did not attempt to
intervene in the action until after its alleged principal, Sovereign, had already had its motion to
intervene and to set aside judgment denied; and (4) that the case law submitted by the parties
weighed more in favor of denying the motion. These factors were properly before the trial court
and were consistent with the evidence and supported the court's legal reasoning.

Counsel for MERS explicitly declined to demonstrate to the trial court a tangible interest
in the mortgage. Parties are bound by the formal admissions of their counsel in an action.
Dick v.
Drainage District No. 2, 187 Kan. 520, 525, 358 P.2d 744 (1961). Counsel for MERS
made no
attempt to show any injury to MERS resulting from the lack of service; in fact, counsel insisted
that it did not have to show a financial or property interest.

MERS argued in another forum that it is not authorized to engage in the
practices that
would make it a party to either the enforcement of mortgages or the transfer of mortgages. In
Mortgage Elec. Reg. Sys. v. Nebraska Dept. of Banking, 270 Neb. 529, 704 N.W.2d
784 (2005),
MERS challenged an administrative finding that it was a mortgage banker subject to license and
registration requirements.

The Nebraska Supreme Court found in favor of MERS, noting that "MERS has no
independent right to collect on any debt because MERS itself has not extended credit, and none of
the mortgage debtors owe MERS any money." 270 Neb. at 535. The Nebraska court reached this
conclusion based on the submissions by counsel for MERS that

"MERS does not take applications, underwrite loans, make decisions on whether to
extend credit,
collect mortgage payments, hold escrows for taxes and insurance, or provide any loan servicing
functions whatsoever. MERS merely tracks the ownership of the lien and is paid for its services
through membership fees charged to its members. MERS does not receive compensation from
consumers." 270 Neb. at 534.

Even if MERS was technically entitled to notice and service in the initial foreclosure
action--an issue that we do not decide at this time--we are not compelled to conclude that the
trial court abused its discretion in denying the motions to vacate default judgment and require
joinder of MERS and Sovereign. The record lacks evidence supporting a claim that MERS
suffered prejudice and would have had a meritorious defense had it been joined as a defendant to
the foreclosure action. We find that the trial court did not abuse its discretion and did not commit
reversible error in ruling on the postdefault motions.

We note that various arguments were presented suggesting that economic policy provides
independent grounds for reversing the trial court. MERS and the amicus curiae
American Land
Title Association argue that MERS provides a cost-efficient method of tracking mortgage
transactions without the complications of county-by-county registration and title searches. The
amicus suggests the statutory recording system is grounded in seventeenth-century
property law
that is entirely unsuited to twentieth-century financial transactions. While this may be true, the
MERS system introduces its own problems and complications.

One such problem is that having a single front man, or nominee, for various financial
institutions makes it difficult for mortgagors and other institutions to determine the identity of the
current note holder.

"[I]t is not uncommon for notes and mortgages to be assigned, often more than once.
When the
role of a servicing agent acting on behalf of a mortgagee is thrown into the mix, it is no wonder
that it is often difficult for unsophisticated borrowers to be certain of the identity of their lenders
and mortgagees." In re Schwartz, 366 B.R. 265, 266 (Bankr. D. Mass. 2007).

"[T]he practices of the various MERS members, including both [the original lender] and
[the
mortgage purchaser], in obscuring from the public the actual ownership of a mortgage, thereby
creating the opportunity for substantial abuses and prejudice to mortgagors . . . , should not be
permitted to insulate [the mortgage purchaser] from the consequences of its actions in accepting
a mortgage from [the original lender] that was already the subject of litigation in which [the
original lender] erroneously represented that it had authority to act as mortgagee."
Johnson, 2008
WL 4182397, at *4.

The amicus argues that "[a] critical function performed by MERS as the
mortgagee is the
receipt of service of all legal process related to the property." The amicus makes this
argument
despite the mortgage clause that specifically calls for notice to be given to the lender,
not the
putative mortgagee. In attempting to circumvent the statutory registration requirement for notice,
MERS creates a system in which the public has no notice of who holds the obligation on a
mortgage.

The Arkansas Supreme Court has noted:

"The only recorded document provides notice that [the original lender] is the lender and,
therefore, MERS's principal. MERS asserts [the original lender] is not its principal. Yet no other
lender recorded its interest as an assignee of [the original lender]. Permitting an agent such as
MERS purports to be to step in and act without a recorded lender directing its action would
wreak havoc on notice in this state." Southwest Homes, ___ Ark. at ___.

In any event, the legislature has established a registration requirement for parties that
desire service of notice of litigation involving real property interests. It is not the duty of this
court to criticize the legislature or to substitute its view on economic or social policy.
Samsel v.
Wheeler Transport Services, Inc., 246 Kan. 336, 348, 789 P.2d 541 (1990).

II. Did The Trial Court's Refusal To Join MERS As A Party Violate MERS's Right
To Due
Process?

MERS contends that the Fourteenth Amendment and §18 of the Kansas
Constitution Bill
of Rights guarantees of due process were violated when the foreclosure action was consummated
without MERS receiving notice of the proceeding and without MERS having the opportunity to
intervene in the action.

Although joinder is evaluated under an abuse of discretion standard, if a constitutional
right is involved the trial judge's exercise of discretion is limited. Discretion must be exercised not
in opposition to, but in accordance with, established principles of law. It is not an arbitrary power.
In re Adoption of B.G.J., 281 Kan. 552, 563, 133 P.3d 1 (2006).

The Fourteenth Amendment to the United States Constitution provides: "No State shall
make or enforce any law which shall abridge the privileges or immunities of citizens of the United
States; nor shall any State deprive any person of life, liberty, or property, without due process of
law."

Section 18 of the Kansas Constitution Bill of Rights provides: "All persons, for injuries
suffered in person, reputation or property, shall have remedy by due course of law, and justice
administered without delay."

Due process provides any interested party with the elementary and fundamental right to
notice of the pendency of an action and the opportunity to present its objections in any proceeding
that is to be accorded finality. Alliance Mortgage Co. v. Pastine, 281 Kan. 1266,
1275, 136 P.3d
457 (2006) (citing Mullane v. Central Hanover Tr. Co., 339 U.S. 306, 314, 94 L. Ed.
865, 70 S.
Ct. 652 [1950]). In the absence of a protected property or liberty interest, there can be no due
process violation. State ex rel. Tomasic v. Unified Gov't of Wyandotte County/Kansas
City, 265
Kan. 779, 809, 962 P.2d 543 (1998).

The Due Process Clause does not protect entitlements where the identity of the alleged
entitlement is vague. Castle Rock v. Gonzales, 545 U.S. 748, 763, 162 L. Ed. 2d 658,
125 S. Ct.
2796 (2005). A protected property right must have some ascertainable monetary value. 545 U.S.
at 766. Indirect monetary benefits do not establish protection under the Fourteenth Amendment.
545 U.S. at 767. An entitlement to a procedure does not constitute a protected property interest.
545 U.S. at 764.

MERS's contention that it was deprived of due process in violation of constitutional
protections runs aground in the shallows of its property interest. As noted in the discussion of the
first issue above, MERS did not demonstrate, in fact, did not attempt to demonstrate, that it
possessed any tangible interest in the mortgage beyond a nominal designation as the mortgagor. It
lent no money and received no payments from the borrower. It suffered no direct, ascertainable
monetary loss as a consequence of the litigation. Having suffered no injury, it does not qualify for
protection under the Due Process Clause of either the United States or the Kansas Constitutions.

Furthermore, MERS received the full opportunity to present arguments and evidence to
the trial court. Only after Sovereign clearly had notice of the litigation, had filed a motion to
intervene, and had participated in a hearing on the motion did MERS--Sovereign's
nominee--elect to file for joinder. Despite its late decision to enter an appearance in the case, the
trial court allowed MERS the opportunity to present arguments and evidence. It cannot be said
that MERS was prejudicially denied notice and the opportunity to be heard.

We find that the district court did not abuse its discretion in denying the motions to vacate
and for joinder and in holding that MERS was not denied due process. We accordingly affirm the
district court and the Court of Appeals.